What are special journals in accounting?
In this article we will discuss special journals and provide an example of a purchases special journal.
1. Definition of a special journal
To keep track of business transactions, companies use a general ledger and subsidiary ledgers as well a general journal and special journals. The general ledger contains control accounts, while a subsidiary ledger contains a group of similar accounts that support a general ledger control account. For example, a general ledger will have an accounts receivable control account while a subsidiary accounts receivable ledger will contain information about increases (decreases) in accounts receivable balances of customers that purchase goods on credit.
Examples of subsidiary ledgers might include:
- Accounts receivable
- Accounts payable
- Inventory
- Fixed assets
- Investments
- Notes receivable
- Notes payable
To learn more about subsidiary ledgers, refer to the following articles:
- What types of subsidiary ledgers are used in manufacturing companies (Part I)?
- What types of subsidiary ledgers are used in manufacturing companies (Part II)?
In addition to the subsidiary ledgers, companies use primary books to record transactions before posting them to the general journal. These books are called special journals. Companies keep special journals to record – in chronological order – the dual effect of the repetitive types of transactions.
Special journals might include the following:
- Purchases: record all purchases on account (i.e., credit)
- Purchase returns: record all purchase returns
- Sales: record all credit sales
- Sales returns: record all sales returns
- Cash receipts: record all cash receipts
- Cash disbursements: record all cash payments
Special journals are useful because they allow:
- Efficiency through specialization (e.g., save time)
- Division of responsibilities
- Faster correction of errors (e.g., trial balance errors)
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